To: Apple Inc. Prepared by: Jillian TodaDate: 4/25/12Re: Apple Inc. in 2010

Introduction and Key IssuesSteve Jobs revolutionized the computer industry when Apple Computer released its “all-in-one” iMac in 1998. This product grew Apple’s sales above the industry’s average and helped Apple reach a $309 million profit for that year. While the PC market was facing competition, Jobs launched huge rebranding campaigns that positioned Apple as a premium company of innovative products with exclusive software and operating system. This strategy transitioned into Apple’s unique “digital hub” strategy of penetrating the mobile device market with fully integrated, lifestyle-focused products. While the PC market developed new products like netbooks, Apple created the iPod, iPhone, and iPad—a device thought to make netbooks obsolete. Apple Computer became Apple Inc. in 2007, hailing in a new era of tech world success.

Originally founded by college dropouts Steve Jobs and Steve Wozniak, Apple Inc. has evolved over thirty-six years into a leading “digital hub” company and brand. In the digital age of 2010, there are more than one billion PCs in use worldwide. The largest PC manufacturers are Hewlett-Packard, Dell, Acer, and Lenovo. Apple Inc., however, has targeted a niche market with premium computers and mobile devices that are branded as more than PCs or cellular phones. Having overcome great competition, leadership turnover, and product sales failure, Apple Inc. in 2010 is above all tech and electronics companies except competitor Microsoft. With stellar sales performance and incredibly strong branding, the only question of Apple Inc. is whether or not this momentum can continue.

The future of Apple is being compromised by falling iPod sales, low global market share in computers, and internal worry over health issues of the company’s icon, Steve Jobs. The technology industry is highly competitive because of its fast-paced and often uncertain rate of change. With Jobs’ future being unforeseen due to ongoing health issues, so too is Apple’s with its recent launch into the non-computer industry merely a decade ago. Furthermore, iPod sales have already fallen in 2009 from the device’s debut in 2001, and Microsoft Windows 7 led resurgence in PC sales that same year. Finally, another issue is that Apple’s Mac sales have increased, but haven’t affected the company’s worldwide PC market share. With Hewlett-Packard boasting a worldwide market share nearly four times that of Apple’s, Apple Inc. needs to address such discrepancies. How Apple Inc. addresses these issues in the coming year will determine the course of the company’s future sustainability.

AlternativesWhile Apple has several uncertainties in its future, one course of action that Apple Inc. can take is to maintain its status quo and not change any of the company’s operations. Apple has enjoyed immense success after breaking into the mobile device market, so continuing to produce iPhones and iPads will further bolster its “digital hub” strategy of technology integration. Remaining on its current path will allow Apple to stay in a comfort zone with its main product lines (Mac, iPod, iPhone, iPad) and dedicate more time to developing the next integrated device. Maintaining its current operations, however, will also risk Apple being passed by its competitors—especially

Microsoft or Google—who expand to different products or to global markets. Also, Apple’s current reputation of releasing cutting-edge products will continue to put pressure on the company in the future.

A second alternative course of action that Apple can take is to change its current strategy. This new strategy should take steps to push farther into the international market to gain greater market share, and dedicate more resources to developing products that are both cutting edge and complimentary, rather than cannibalizing. The decrease in Apple’s iPod sales in 2009 was not solely because of its late stage in the product lifecycle, but also due to the cannibalizing effect caused by the release of the iTouch and iPhone in 2007. Apple has unintentionally made some of its products obsolete because of the full integration of capabilities its newer products have. Dedicating more energy into research and development of products will allow Apple to push these products into international markets alongside its Mac computers. Gaining greater worldwide PC market share will ensure that Apple can stay competitive with companies like Hewlett-Packard, Microsoft, and Google. The main disadvantage of this strategy is the decreased time and resources available to operations outside of research and development. Apple Inc. would likely need to launch international marketing campaigns as well, which would require further time, money, and innovation.

CriteriaThere are three criteria that should be used to assess these two strategies. The first criterion is that the decision Apple Inc. chooses must benefit the company’s sales in the long-term, not only in the immediate future’s profitability. Being a technology company, Apple must strive for stability in order to stay competitive and relevant, as well as to have money for further research and development. The second criterion is that the decision must be aligned with Apple’s vision and company values of being a “cultural force” that can “Think Different” with innovation and creativity. These elements are integral to the image and reputation of Apple Inc. and are part of what makes Apple a premium brand. Finally, the last criterion is that the decision must provide opportunities for growth. In a “digital age,” Apple must continually grow and adapt with the changing technological advances to have an advantage over competing companies.

RecommendationApple Inc. has undoubtedly changed the rules of the technology industry. If Apple were to continue with its current strategy, the company would be able to fulfill the second criterion of maintaining its brand values. It is uncertain, however, if the company would be able to maintain future profitability because it depends largely on sales of products. These products will not have growth opportunities as the U.S. market becomes saturated with Apple devices. The need to grow in new markets would remain, which is why it is recommended that Apple take the second alternative course of action and change its strategy. Apple should dedicate more resources to research and development of new products, which will help Apple move into the international markets for computers and electronic devices. By marketing internationally, Apple will increase its sales because of the large potential customer base in other countries. The company will not only be able to maintain its brand values, but also refine them as Apple will market its brand to the rest of the world. Finally, Apple will be presented with great growth opportunities by tapping into the international market. This alternative will help Apple take a leap forward in sustaining its future during a time of uncertainty.